Trump Green-Lights a Debt Default

Trump didn’t just tell lies at the CNN town-hall event. He threw bombs, too. Photo: CNN/YouTube

It’s a testament to how many outrageous things Donald Trump said during last night’s CNN town hall that the one bit of real breaking news he offered didn’t initially get much attention (I didn’t even mention it in my own horrified take on the event). Amid his evasive answers and lies on many old and new subjects, Trump was unambiguous about the debt-limit crisis that has gripped Washington. Indeed, he issued marching orders to the congressional Republicans who are playing chicken with Joe Biden on the subject as a potentially catastrophic debt default looms, as CNBC reports:

“I say to the Republicans out there — congressmen, senators — if they don’t give you massive cuts, you’re going to have to do a default,” said Trump, who is again running for president. “And I don’t believe they’re going to do a default because I think the Democrats will absolutely cave, will absolutely cave because you don’t want to have that happen. But it’s better than what we’re doing right now because we’re spending money like drunken sailors.”

When pushed by CNN anchor Kaitlan Collins to clarify his remarks, Trump said: “Well, you might as well do it now, because you’ll do it later. Because we have to save this country. Our country is dying. Our country is being destroyed by stupid people, by very stupid people.”

So the once — and perhaps future — president of the United States, whose own fiscal policies contributed so heavily to the outstanding national debt he now deems intolerable, thinks that Republicans need to keep holding debt-limit relief hostage to the outlandish demands dictated by the House Freedom Caucus. And if that fails to make Democrats “cave,” says Trump, they should go ahead and kill the hostage.

Trump also offered cover to the right-wing extremists who claim a debt default might not be that bad despite warnings from every direction that it could generate a national and even global economic collapse. (JPMorgan Chase CEO Jamie Dimon has warned that even getting close to a default could trigger a huge market panic.) As the Financial Times observed:

Trump shrugged off concerns about a default, which the US Treasury has warned poses a “catastrophic” risk to the global economy.

“It’s really psychological more than anything else. And it could be really bad, it could be maybe nothing, maybe it’s a bad week, or a bad day, who knows?” Trump said.

It was reminiscent of President Trump minimizing the threat posed by the COVID-19 virus until it was killing Americans right and left. But this is, in some respects, even more irresponsible since Trump won’t have to deal with the short-term consequences of being grievously wrong. In fact, he may share the apparent belief of some Republican hard-liners that a debt default followed by a recession would guarantee them victory in 2024 even if they deliberately caused it.

Whatever the wily old demagogue was thinking, his words could have a terrible impact on the fraught negotiations just now getting underway between Kevin McCarthy and the White House. If he cuts a deal with Democrats to avoid calamity, he risks Truth Social posts denouncing him as a gutless RINO who unnecessarily gave in when he might have achieved a historic victory. And even if Trump doesn’t go that far, he is very definitely encouraging the extremists who are probably already plotting a revolt against McCarthy if he does the responsible thing. What’s a little recession — which will be blamed on Biden anyway — compared to McCarthy keeping his gavel and Freedom Caucus members consolidating total control over the congressional GOP?

In other words, Trump has now raised the already high odds against a debt-limit deal in the short term. It’s another reason that the Biden administration should search high and low for a way around the debt limit that doesn’t require cooperation from these people.